NSW doesn’t need a separate Building Commission, says the man appointed as the state’s Building Commissioner. But it does need a “reformed and modernised” regulator with sufficient powers and technology to implement the government’s reform agenda, David Chandler tells The Fifth Estate.
Nearly two years into the job and less than a year after he gained the power to enter and inspect building sites, NSW Building Commissioner David Chandler has attracted bouquets and brickbats for his shake-up of state’s controversial residential apartments sector.
There have been accusations the government’s regulations are a “light touch”, especially after major defects were uncovered in more Sydney apartment developments in the past few months.
There have been calls too for more certifiers to be fined for signing off on buildings with material defects and for some of them to lose their accreditation. Other critics say there still isn’t enough protection for consumers who have bought apartments they can’t safely live in.
But the veteran construction industry executive points out that work on many of the defective developments would have already been underway before he arrived on the scene. With his team of auditors now in full-swing, Chandler says we can expect to see more prohibition, stop-work and building rectification orders issued very soon.
In a wide-ranging interview with The Fifth Estate, Chandler says regulators, developers and certifiers are now taking him and the government’s reforms seriously, and he is witnessing a change in the culture among certifiers. But some certifiers may still lose their accreditation, he says.
His initial two-year appointment has been extended a year until September 2022 and by then he will have delivered a business case for a “modern” building regulator to the state government.
“It will say what we have achieved, what a future regulator will have to pay close attention to, and what the management structure should be to drive it,’’ Chandler told The Fifth Estate.
Asked whether the new regulations will end up under the auspices of NSW’s Office of Fair Trading (OFT), he says under the Residential Apartment Buildings Act (RAB) there is a requirement for the state to have a building commissioner but that doesn’t mean a separate building commission needs to be created from scratch.
“I don’t think we need a building commission; we need a transformed regulator who is modernised. It will have the powers and the technology and the resources to deliver. That is what is more important. It will be substantive and enduring.”
In 2019, the state government was forced to tighten building standards after a series of apartment buildings in Sydney were evacuated because of major faults that put residents at risk, and caused millions of dollars’ worth of damage.
Last year, two laws passed the NSW Parliament – first, the Residential Apartment Buildings (RAB) Act 2020, which provides the Building Commissioner with broad-ranging investigative powers to inspect building sites, stop work, and order rectification work. Second, the Design and Building Practitioners Act 2020, (effective 1 July, 2021) requires the registration of designers and engineers alongside practitioner declarations of compliance of their work.
Chandler says when he began his work as Commissioner, a figure of 80 per cent was bandied about for the percentage of Class 2 buildings with defects.
Since then, surveys of strata corporations done by the OFT have found that about 36 per cent of buildings have what Chandler calls material defects in the common property of buildings, such as waterproofing, cladding, building services and fire installations.
“It is not pretty but let’s put that in context because it means 64 per cent don’t have serious defects,” he says.
“One of my jobs is to get the insurance industry back in the market … that [36 per cent figure] helps me reset the conversation.
“The plan is to do that survey again at the end of 2022 and I would hope to see the number come off a bit.”
He’s more worried that the survey found only 17 per cent of strata building owners report material defects to the OFT.
To encourage more of them to report, the OFT complaints portal is being re-designed to separate complaints about material defects from complaints relating only to a particular apartment lot. And, complaints must be lodged by an authorised member of an owners’ corporation.
AT A GLANCE
- Chandler’s term as Building Commissioner extended by a year
- Expect to see some certifiers losing their accreditation
- Expect to see more prohibition, stop-work and rectification orders
- A pending review of strata title act may amplify owners’ corporation obligations
- More legislation might be introduced to deal with “unintended” consequences of the RAB (NSW Residential Apartments) and Design and Building Practitioners acts
- “Dodgy” certifiers, poor safe work practises and “opaque” corporate structures are red flags for audits
More seriously, some owners’ corporations fail to note all serious defects or material issues in their minutes, making it difficult for potential buyers to fully investigate a building before purchase.
“I need to get more people to report their defects to the OFT. Quite a lot of them are keeping their defects hidden because they are worried about them affecting re-sale,” says Chandler.
“It is likely we will amplify those obligations [to record everything in meeting minutes] in the review of the strata title act that will come up this year. There is no doubt at all that owners’ corporations have an obligation to keep their records up-to-date.”
As for certifiers, they are coming to terms with the fact that they have very clear obligations and that they may not have been meeting them in the past, says Chandler, who has been contacted by regulators in other states interested in NSW’s new Practice Standard for Registered Certifiers.
“What we are seeing is a culture change in certifiers across the industry not just in Class 2 but in other classes. That might be an unintended consequence but it’s not a bad one to have.”
The regulations will eventually catch up with certifiers who are signing off on buildings that have major defects.
“That’s in process but it does take about 18 months to take away someone’s accreditation because they are entitled to due process.”
It could also take time for any unintended consequences to emerge from the reforms.
“It is such a big piece of legislation with such wide-ranging ramifications, let’s give it a year so that we can see if there are any unintended consequences. The government is aware that where there are [unintended consequences] they would be prepared to look at a second tranche of legislation to deal with them.”
Chandler says his decision to have auditors identify the projects with the riskiest profiles – probably about 10 per cent of all apartment projects – based on various “flags” has paid off.
“Two other flags worthy of note are that we are collaborating with Safe Work NSW with data sharing so if a builder has a track record of continued safety breaches during construction that is a flag. If they have a low regard for safety they probably have a low regard for compliance.
“The third thing we are looking for is developers who are what we call opaque, people whose mailing addresses are at an accountant’s address or at a lawyer of convenience. [These companies] have virtually no governance … they don’t have a track record of construction; they don’t have a brand they want to protect. They just come and go at will and leave a trail of trash behind them.
“We want to make sure that developers who take pride in their brand and have been around for a while aren’t the ones we are sitting on.
“We want to know about the character of the players in an entity. Have they been involved in phoenixing? Have they got a bad corporate history? We look at capability, how many years in business they have, the quality of people you would expect a developer to have.
“And then we look at their financial profile, which is very powerful in telling us if we are dealing with people of substance or people of sand.
“I am dealing with about one billion lines of data to help me make that sort of judgement.
We turn up at sites and the developer says ‘How did you pick me?’ and we say ‘You don’t realise how easy it was to pick you. You basically picked yourself.’”
Chandler conducts a fortnightly review of all the projects his team is looking at. Since September, there have been 56 audits including 45 pre-occupation certificate audits. Numerous stop-work and prohibition orders have been placed on developments that failed to meet the requirements for an occupation certificate or because defects were so bad they put people at risk; other developers have been issued with building rectification orders.
“I review that scorecard every fortnight and then I turn to every single project in that process so I can see what is coming up, and who is doing what … I am actively engaged with those 56 projects. It’s very hands on.”
There are threats, yes
Chandler didn’t name names in this interview, but he has made it clear on his Linkedin page that he has been threatened with defamation, and accused of being connected to a “shakedown” of one developer.
One media outlet has reported that a developer whose project was reviewed and found wanting by the commissioner allegedly referred Chandler to the the Independent Commission Against Corruption.
Chandler told TFE that some developers don’t support the reforms because the cost of fixing their building defects are significant, or because they have concluded they won’t be able to survive under the new regulations and increased scrutiny.
“There are people out there who talk with forked tongues who say they are 100 per cent behind us but we know they are not,” he says.
“One of the things I have been doing over the past six weeks is making it clear to people that the rules are not David Chandler-dependent. I have a team of people driving this; I have made some great progress at the OFT in terms of implementing the changes. If anyone thinks this transformation is solely dependent on me they need to think again.”